More bonds needed for the haircut

After pressure, recriminations and an urgent meeting between Finance minister Venizelos and the heads of major Greek banks, the part of their participation in the PSI+ was concluded last night.

They decided on the full participation of banks in the bond exchange program, including government-guaranteed securities for loans to SOEs, some of which were excluded. The banks agreed to fully participate and signed the press release issued by the ministry after the meeting.

However, even after the acceptance by banks of their full participation in the PSI+, it appears that the participation rate is not reaching the required limit. The Greek bonds necessarily involved in the haircut amount to 177 billion. Along with loans to SOEs, the amount reaches 184 billion euros, of the 205 billion to be cut.

According to estimates by the ministry and the banks, the program cannot be successfully implemented without the activation of CACs. With these, it will collect more than 90% and thus reach its completion.

The problem of Funds

The participation of insurance funds remains a problem, with their reserves being invested in bonds by the Bank of Greece at around 22 billion euros. The boards of pension funds met yesterday, five of which reached a negative decision and will not participate in the PSI+. They are: TEAIT (Supplementary Fund of the private sector), ETAA (Scientists Fund, which includes the funds of doctors, lawyers and engineers), ETAP-Mass Media (Press Fund), TAPYT (Welfare Fund of the private sector) and TEAPASA (Fund / Mutual Funds of insurance companies). These funds hold bonds of 3.5 billion euros of the 6.5 to 7 billion in bonds of all funds. OPAD, IKA, OGA, Civil Servants Pension Fund, TAYTEKO (fund of SOE employees), ETEAM and TPDY (Public Employees Providence Fund) came to a positive decision.

The decisions of two more funds, OAEE and TEADY, are expected today, the boards of which were suspended after the interventions by ADEDY and PAME.

Through Koutroumanis and Venizelos, the government is sending a message to the administrations of the funds which are reacting, that they will be penalized for their refusal, even suggesting the measure of bringing down their administrations. Funds answer back to the government that they decided within the limits set by the law and the interests of the Funds and their insured. The strong resistance is supported even further by the leaked information, according to which the Troika will not discuss any likelihood of the replacement of losses incurred by certain Funds through their participation in the haircut.

By tomorrow night, however, the puzzle of the Greek part will have been completed and the government will know exactly the turnout and the amount it will represent in relation to the debt. This will determine the activation of CACs.

This also includes individuals' bonds of approximately 5 billion euros, pharmaceutical company bonds of 2.2 billion and the bonds of those sacked by the former Olympic Airways at 136 million.

After the completion of the process, i.e. around April 10-12, when the corresponding procedure for the involvement of foreign banks will have been completed, the government must announce what it intends to do to compensate individuals, as Venizelos has orally committed himself to doing.